Bankruptcy is a much needed relief valve for those individuals who are struggling to make ends meet. Upon receipt of a discharge, debtors are relieved from the vast majority, if not all of their debt. However, the Wall Street Journal on December 23, 2011 published an article written by Jessica Silver-Greenberg, stating that Capital One Financial Corp did not want to let the debt go. Capital One is one of the largest U.S. banks by assets. It is hard to envision any credit card carrying person that does not know the pitch “What’s in your wallet?” Apparently, Capital One wants to know if money is in your wallet to pay your discharged debt.

Even though the practice is illegal, Capital One has been attempting to collect discharged debt in violation of federal law. A court appointed auditor concluded earlier in the year that Capital One had pursued 15,500 invalid claims against debtors that had discharged the debt in bankruptcy. Although Capital One is disputing the auditor’s findings, Capital One may have violated part of a settlement between the company and a U.S. Bankruptcy Trustee in 2010. Furthermore, the chief judge of the United States Bankruptcy Court in Aberdeen, Miss., has stated that he plan to demand that Capital One appear and explain its debt collection practices. After Capital One advised the court that the attempt to collect on a discharged $43,396.59 debt was an innocent mistake, the WSJ reported that Chief Judge Houston stated that he wanted some proof that this was a legitimate error. The prior 2010 settlement was related to Capital One filing claims in bankruptcy cases for debt that had been previously discharged. The trustee said that the wrongful claims were the result of Capital One failing to keep track of the bankruptcy filings by its customers.

Debt collection is of major importance to Capital One. As of September 30, the WSJ reports that Capital One had $2.7 billion in net income on $12.22 billion in revenue. Capital One could have potentially doubled its net income if it could have eliminated its uncollectible loans.

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